The Shenzhen Composite ended February at 0.21 gold ounces, up 0.02 ounces from January and 58% from February of last year. The index was trading at an average price-to-earnings ratio of 39.25.
The closing price, 0.21 ounces, was the highest price paid since December, 2007, when the stock market bubble was bursting. This graph indicates that the price of the market is moving independently of earnings. Higher prices seem to only be driven by higher valuations, not higher earnings.
If measured by annual percentage change in price, China has experienced four bull markets during the period covered (January, 1998 to the present). The first was between 1999 and 2001, which lasted 25 months. The second was between 2006 and 2008, lasting 23 months. The third was between 2009 and 2010, lasting 11 months. This most recent bull market started in 2013 and has continued until now, which means at 26 months in duration, it is the longest bull market in this period. If the last twelve months are repeated over the next twelve months, the price of the market will exceed the record hit in 2007 at the height of the bubble.
